“Bayesian Persuasion and Information Design”, 2019-08-01 ():
A school may improve its students’ job outcomes if it issues only coarse grades. Google can reduce congestion on roads by giving drivers noisy information about the state of traffic. A social planner might raise everyone’s welfare by providing only partial information about solvency of banks. All of this can happen even when everyone is fully rational and understands the data-generating process.
Each of these examples raises questions of what is the (socially or privately) optimal information that should be revealed.
In this article, I review the literature that answers such questions.